The UK is facing a potentially damaging row with Brussels as it prepares for Brexit, with the EU fraud investigators recommending the country pay 2bn (£1.7bn) to cover alleged customs failures related to Chinese imports.

The bloc's anti-fraud office, known as OLAF, said it believed the EU's budget was owed the money to cover the cost of duties lost when the UK failed to tackle a widespread, and deliberate, undervaluation of goods.

Its inquiry found that fraudsters evaded customs duties by using false invoices and incorrect customs value declarations between 2013 and 2016.

OLAF claimed that while several other EU member states took action to combat the fraud, HM Revenue & Customs (HMRC) continued to ignore the problem despite repeated warnings.

Its statement said: "These fraudsters are in fact organised crime groups whose actions affect the entire EU; they operate in criminal networks active across the EU.